On April 27, 2012, a final judgment was entered against Kenneth A. Wolkoff (“Wolkoff”) and George Sobol (“Sobol”) in an action filed by the Securities and Exchange Commission (“Commission”) in the United States District Court for the District of Columbia against e-Smart Technologies, Inc. (“e-Smart”) and related individuals and entities. In that action, the Commission alleges that defendants Wolkoff and Sobol participated in an unregistered stock offering of e-Smart securities in violation of the securities registration requirements of the Securities Act of 1933 (“Securities Act”) and acted as unregistered broker-dealers in violation of the Securities Exchange Act of 1934 (“Exchange Act”).

Specifically, the Commission alleges that Wolkoff participated in the unregistered stock offering from April 2005 through at least June 2006, completing at least 115 transactions which brought in over $2,600,000 and sold over 26 million e-Smart shares. The Commission also alleges that Sobol participated in the unregistered stock offering from March 2005 through at least June 2006, completing at least 19 transactions which brought in over $890,000 and sold over $8.8 million e-Smart shares. During this period, neither was registered with the Commission as a broker-dealer or associated with a registered broker-dealer.

Wolkoff consented to a final judgment permanently enjoining him from violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act. Wolkoff also consented to be barred for five years from participating in the offering or sale of a penny stock, to disgorge all e-Smart stock he received as compensation for his sales efforts and to pay a $40,000 penalty.

Sobol consented to a final judgment permanently enjoining him from violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act. And Sobol consented to be barred for five years from participating in the offering or sale of a penny stock, to disgorge all e-Smart stock in which he has a legal or beneficial interest and to pay a $30,000 penalty.

The litigation against the other defendants, alleging violations of the anti-fraud, securities registration, financial reporting, books and records, and internal control provisions of the federal securities laws, is ongoing.